tv Nightly Business Report PBS October 10, 2012 1:00am-1:30am PDT
>> this is nbr. captioning sponsored by wpbt >> susie: good evening, everyone. i'm susie gharib. tom's off tonight. alcoa's earnings beat analyst estimates. we'll have more in our exclusive interview with c.e.o. klaus kleinfeld. stocks tumble on the five-year anniversary of the dow and s&p's record highs. what will it take for wall street to make a comeback? and find out what daily-deal sites like living social are doing to lure holiday shoppers as we continue our week-long look at holiday retail. that and more tonight on nbr! better than expected earnings and revenues from alcoa tonight. after the closing bell, the aluminum giant said it earned three cents a share in the third quarter. analysts were expecting break- even results. revenues also topped estimates at $5.8 billion, but that was below last year's level. the company repeated its
forecast that aluminum demand will double between now and 2020. alcoa is the first dow component to report earnings, and is considered a bellwether of how the economy is faring. the stock barely budged in the regular session, closing at $9.13 a share, and was up a few pennies after hours. we're happy to have with us now alcoa c.e.o. klaus kleinfeld. >> welcome back to nightly business report. baseed on how alcoa did in the third quarter, how do you think business will be for you for the rest of this year and going into 2013? >> well, it's a miktsed word out there. there's a lot of volatility. we see in the end markets that we confirm, the aluminum market is going to be about growth six percent. we took is down a notch from seven percent. as you just said, this is a
decade where aluminum demand has doubled. there's high growth also here in the u.s. and we've seen that in the aerospace industry, very, very nice. we're seeing it in the u.s. automotive segment, very nice, and then there are on the other side -- i mean, coming down. we've seen the heavy truck segment coming down substantially, pretty much in the u.s., and building and constructions on the commercial building and construction side, there's still very little signs of life there. >> susie: you know wha, are your calculus telling you? we hear how businesses are weighed down by uncertainty. are they puting in more orders with you, or less? >> well, it's slowing down a little bit on some segments and other segments are strong. i believe if you look at it on a regional basis. the euro sown, as we've seen
yesterday from projections. it's obviously in a difficult spot and continues to slow down. i just spent a week in china two weeks ago and had a lot of meetings with customers and as well as high government officials, and i could see that they're putting in a similar program which is strongly targeted on the infrastructure side. so i'm confident that we will see growth coming back most likely at the end of the fourth quarter, i believe. and the u.s., atz as i just said, is doing a little better than we originally thought driven by the two strong segments, automotive and aerospace. >> susie: how are you factoring demand forecast when the international monetary fund saying today there are serious risks of a global recession? things are slowing down in china. how are you meet those kinds of high demands in the way
that you're forecasting? >> look, we see the industry, and there's a lot of industry that is are wanting more and more aluminum. we see in the u.s., for instance, the automotive industry, not only growing but more strongly growing on the aluminum side, driven by regulations for lower emissions. and stronger kuflt mersensitivity for fuel efficiencies. and these two things come together and bring substantial amount of aluminum growth, substituting steel against aluminum and make it more fuel efficient and at the same time keep it safe. that's what we're seing in many of the end markets as well as in the packaging industry when you see the sustainability. aluminum is recycleable. you throw it away and can testimonies back as a new can. that helps us.
>> susie: we have to leave it there. klaus, thank you so much for coming on the program. we've been speaking with klaus kleinfeld skoe of alcoo and we've got a technical analysis of alcoa shares on the web site. you'll find it on the blogs at nbr.com. >> reporter: i'm diane eastabrook in maple park, illinois. still ahead, i'll tell you how extreme weather this year is wreaking havoc on agri-tourism. >> susie: more trouble on the horizon for the global economy. the international monetary fund says risks for a serious global slowdown are "alarmingly high." the international lender of last resort today cut its growth outlook for the world's economy. it now sees the global economy expanding by 3.3% this year and 3.6% next year. that's down slightly from its july forecast. the u.s. federal reserve is also cautious about the economy. it sees risks to growth over the short term, but minutes from its
latest policy meeting show fed officials are still optimistic about the long haul. and on wall street today, worries about the coming flood of corporate earnings-- the dow lost 110 points, the nasdaq p dropped 47, the s&p was off 14.5%. that sell-off comes on the five- year anniversary of all-time highs for the dow and s&p 500. after a crazy ride in which both averages lost half their value, today, they're within striking distance of those magic numbers. suzanne pratt takes a look at whether we'll see the milestones anytime soon. >> reporter: here's where the major averages are currently trading. the dow is within 690 points of its all-time high, while the s&p 500 is 124 away from its best level. a few really good days and perhaps we'll have new milestones for one or both of the major indexes. veteran floor trader art cashin says it's a possibility, but there's not a lot of conviction among investors today.
theou can see some stocks that have led things have been defensive stocks. so, that tells you that it's not quite holding your nose and buying stocks, but saying "i'm not entirely enthusiastic about this but i think i'll do it." >> reporter: stock market pessimists point to continued economic instability in europe, confusion about america's fiscal cliff, and worries about third quarter earnings. optimists talk about attractive stock market valuations and tidbits of evidence the economy might be improving. some also expect companies to say nice things about the business climate next year. >> based on whatever guidance we get for 2013, if it does hint at improvement in sequential quarters, i think investors might feel optimism and get into the buying mode. >> reporter: that buying mode could easily turn into a selling mode. that is, if the third quarter earnings are more disappointing
than already expected and, if companies are less than rosy in the comments about the future. suzanne pratt, nbr, new york. >> susie: there was another big sell-off today in apple shares. investors dumped the stock for the fourth straight session on a long list of concerns. they include backlash against the map app and labor strikes at an iphone assembly plant. apple tumbled more than 2% to $635 a share. that level means it's now officially in correction territory. erika miller takes a closer look at whether the decline is a warning sign or a buying opportunity. >> reporter: apple shares have gotten bruised due to a host of concerns. at the top of the list is worry about long-term demand for the new iphone 5. yes, apple sold five million of the devices on its opening weekend, but that was below some analysts' rosy forecasts. and apple's star product has been criticized for scratching easily, camera haze, and an inferior map ap. >> i'm not sure that it will
translate into more consumers buying android operating systems devices, but at the minimum, it's causing them to hesitate to upgrade their operating system, which isn't good for apple. >> reporter: it's also not good for apple that there has been labor unrest at a chinese facility where the iphones are made. add it all up, and the stock is down more than 10% from its record close of $702 a share less than a month ago. but the stock is still up nearly 60% since the start of the year, far more than the s&p 500. today, nomura initiated coverage on apple with a neutral rating, a rarity on wall street. the analyst cites worries about slower growth in 2014 and has a target price of $710 a share. but tom forte thinks the stock is headed to $750, especially if apple unveils a smaller, cheaper version of its ipad this fall. >> i think that would enable apple to then tackle tablets at the low end and the high end, and i think this could put some air back into apple stock. >> reporter: another possibility
is positive news when apple releases earnings october 25. the report will provide early glimpse at sales of the iphone 5, which came out just nine days before the end of the quarter. erika miller, nbr, new york. >> susie: charles schwab says most investment advisors are bearish about the stock market and the economy over the next six months. the brokerage firm surveyed more than 800 investment advisors, overseeing over $700 billion in assets. joining us with more, the head of schwab advisor services,
bernie clark. this is a really fascinating survey, bernie. let's take a look at some of the details of it, before we get started. just one third of the investment advisors are bullish on the outlook for stocks. the rest are bearish or unsure. and then in terms of some of the concerns out tl, investmentors worry body inflation going up, and worried about the job market, unemployment rising here. what's your take on the feedback from this survey? >> thanks, susie. you know, we're in a period of temporary bearishness. there's a certain amount of uncertainty going into the election, obviously, zero interest rates, tax code changes imminent at some time, and a global market looking reasonably unsteady. if you think about the advisor view, it's a long one. they give assurance to their clients but we're finding all-time lows in the assurance they're going to need to provide to clients. we're seeing client advisors, and advisors tightly aligning around the long term plan.
it's a little more bullish than the bearish sentiment we've been seeing. >> susie: meanwhile, in this period of upcertainly, take a look at what some of the investment choices have been, saying less money, and small cap stocks going into etfs, real estate and cash. what are your thoughts on this? >> the advisors are keenly focused on providing liquidity and transparency for clients. at the same time they're doing that, they need to bring a little more income into the portfolio. so you're starting to see alternatives. register alternatives, and real estate investment trusts. >> this is the first time since we've beenwe doing the survey when you asked investors about the american dream, and whether it's achieveable or not, and two thirds said it's difficult to achieve client goals going
forward. tell us more what the investment advisors were telling but this. >> we see an interesting alignment between advisors and clients. advisors feel it's challenging to meet client objectives. they're a little more bullish than the clients. the clients might be more bearish, but bullish on advisors. almost an equal number saig i know my advisor is going to accomplish what they need to. i love the statistic that people still believe in the american cream. they believe in safety and security. their homes, their children, trying to drive education into the process, and yet at the same time, it might look a little different. 36% of advisors seem to think that millennials may not enjoy the same wealth that their parents did. >> susie: it's a tough situation. bernie clark of schwab advisors. >> very much appreciated.
>> susie: a hopeful message today from german chancellor angela merkel during her first visit to greece since europe's debt crisis began three years ago. she told greece's prime minister she hopes greece will stay in the euro-zone and she can "see the light at the end of the tunnel." but that's not how the greeks see it. tens of thousands of people demonstrated outside the parliament building in athens, protesting tough cutbacks the country is being forced to make in exchange for bailout loans. many demonstrators were wearing nazi uniforms. they target merkel as the architect of the tough austerity measures. many investors are stressed and nervous about the upcoming earnings season, even though
those earnings from alcoa were better than expected. yum brands also had positive earnings news today. the company beat wall street forecasts and says it expects earnings for the year to grow at least 13%. the parent of kfc, pizza hut and taco bell reported profits of 99 cents a share. that's two cents above expectations, those results due partly to strong growth in china. >> while china gets most of the focus with yum brands, and rightfully so, i think investors have to keep in mind other parts of the business. and as we start to see the u.s. rebound, it adds a turnaround story to what has already been a pretty compelling emerging market growth story. >> susie: shares of yum ended the session down a little more than 1%, but were up more than $2 in after-market trading a bit of a different story for some tech companies. shares of intel sold off, ending down nearly 3%. it was the weakest member of the dow. a couple of wall street analysts making negative calls on the company today on concerns over slowing sales of p.c.s and notebook computers.
intel is among a handful of dow stocks that are down for the year. netflix was also in the minus column. the streaming movie rental company ended the session down today after picking up some momentum yesterday. bank of america says amazon is becoming more of a competitive threat to the company. the stock has run up over the past two weeks, but ended today down 10%. walmart is also looking to stay competitive against amazon. the nation's largest retailer is testing a same-day delivery service for customers who buy popular items online during the holiday shopping season. the tests, which started this month, are taking place in five markets around the country. about 5,000 items will be available for same-day service. shares of walmart today were down 1.5% ahead of the company's annual shareholder meeting tomorrow. on the energy front, oil prices moved higher today. prices spiked back above $90 a barrel on concerns about supply disruption as the conflict between syria and turkey
continues to escalate. after the close, chevron issued a third-quarter profit warning due to the impact of hurricane issac on oil production in the gulf of mexico. shares of chevron were down about $2 in after-hours trading. and finally, all five of the most actively traded etfs ended lower. hardest hit were powershare's q's and ishare's russell 2000. and that's tonight's "market focus." it may be a tougher christmas than expected for some of the nation's retailers.
the latest survey of consumers by the n.p.d. group shows just one in ten plan to spend more on gifts this year than last. the retail tracking firm says the rest plan to spend the same as last year or less. and when they do shop, the results show consumers will be focused on practical items, convenience and value. coupons from web sites like groupon and living social are also popular with consumers. and deals that are sold year- round are also becoming popular holiday gifts. right now, companies are getting ready for what could be a huge season for the daily deal industry. sylvia hall continues our coverage of holiday retail. >> reporter: here at living social's washington headquarters, teams are working to offer gifts you can't take home in a box-- everything from spa days to cooking classes to fancy dinners, you name it. >> we have a gift guide coming out this year where we're working with all of our major markets. we're actually featuring one great business from each type of
category, and really promoting experiences and things that people can buy and go and give and gift. >> reporter: c.e.o. tim o'shaughnessy says, last year, living social made 25% of its sales during the holidays, and he expects a lift this year, too. so it makes sense the company is already working on plans for the perfect holiday shopping experience. >> if you've got someone on your list who's all about exploring and adventure, you'll be able to click that tab. >> reporter: plus, a few incentives for the gift giver. >> if you purchase $100 worth of vouchers between november 22 and december 4, we're going to give you 25 "deal bucks" to come back to the site after december 22 to buy yourself a little something. >> reporter: this targeted holiday strategy hasn't been around long. daily deal sites have really only had big holiday seasons since 2010, when they sold as much as $20 million worth of deals, according to yipit.com, which tracks industry statistics. business exploded in 2011, when it sold about five times as much in holiday deals.
>> the industry has grown 25% to 30% since then, with a more concerted push into gifts and marketing-specific deals as gifts. you know, i'd be very, very surprised if we don't see $150 million this year. >> reporter: yipit's unaiz kabani expects deals on gadgets and other retail items to drive sales for most sites this year. but living social is taking a different route and focusing mostly on selling experiences. >> experiences are kind of our sweet spot, and things that people love to give-- so, you know, that day at the spa, that once-in-a-lifetime bucket list sort of thing, whether its getting the exotic car or going skydiving. >> reporter: right now, daily deal sites do not depend on holiday sales as much as traditional retail businesses. but kabani says that could change. as these companies evolve, they could begin banking on the holidays. sylvia hall, nbr, washington. >> susie: tomorrow, ebay has a big announcement. we'll continue our retail coverage with the president of
ebay marketplaces, devin wenig. looks like wall street bankers will be big spenders this holiday season. as ruben ramirez reports, bonuses are expected to be on the high side. >> reporter: most wall street bonuses won't be paid till early next year, but already, many bankers are expecting bigger checks that last year. nearly half of those on the street expect bonuses to be up from 2011. >> people that are managing money, and so that's, for example, hedge funds or people who manage other people's money, those are the places where we saw more optimism. the pessimism we found was in the larger banks. >> reporter: while many say the overall performance of their firm is more important this year, the biggest reason for a larger bonus is still individual performance. some of the biggest outside factors putting pressure on bonuses-- the u.s. economy, dodd-frank, firms trimming pay, and the euro-zone crisis. wall streeters in the glass- half-full camp see bonuses rising over the next three
years, and think they could even get back to those lofty pre- crisis levels. ruben ramirez, nbr, new york. >> susie: there's been a lot of talk about nfl jerseys, now that nike is taking over as the league's official jersey maker. but in tonight's "beyond the scoreboard," rick horrow says there's another big winner when it comes to nfl jerseys. >> the jersey list may be limited to sales from dick's sporting goods, but the biggest winner may be the company itself. the list is broken down into several categories, including overall sales, best selling offensive and defensive players, and top rookies. the genius of the jersey report is how it keeps dick's front and center on the minds of very lucrative customers, nfl fans, and with allowing them to buy a jersey with a click. this isn't the only example of a company looking outside its core business and using sports to drive sales or web traffic. "forbes" annual sports franchise
valuation lists help the company sell magazines. for years, "bloomberg businessweek" has been ranking players by on- and off-field attributes in the power 100, generating millions of online page views. with dick's, the first company to come to market with an official jerseys list, the company is first down the field for its shareholders. i'm rick horrow. >> susie: earlier, we told you about apple's bad day. but there's trouble for another apple-- the u.s. apple crop, to be exact. the department of agriculture says american farmers will produce about 15% fewer apples this year than last. as diane eastabrook reports the culprit was strange spring weather. >> these are the fruit buds right here ready for next year. >> reporter: hopefully, next year will be a lot better than this year for wade kuiper. the northern illinois farmer estimates he lost nearly half of his apple crop after an april frost killed off blossoms that bloomed during a march warm spell >> that cold air settled down, and then it would freeze the
buds off. at the 28-degree mark, you're going to lose 10%. at the 25-degree mark, you're going to get a 90% kill. >> reporter: kuiper says he probably wouldn't have had any apples this year if he hadn't installed a huge propane fan to blow warm air over his 8,000 trees. still, many of the apples that survived are marked with frost rings. illinois apple growers are expected to produce their smallest apple crop in decades. the state estimates they'll only produce about 26 million pounds of apples this year. they produced 40 million pounds last year. fortunately for kuiper, the summer drought helped yield a bumper crop of pumpkins, which like hot, dry weather. the pumpkins are driving traffic to the family's farm and to its store, where the kuipers sell gifts and goodies. still, kuiper's you-pick orchard was the biggest money-maker, so the lost apple sales will result in the farm's first financial loss ever. >> you still have to do
everything the same as you do if you have a small crop or a big crop. you still got to take care of it, spray, take care of the bugs, everything. plus, we dumped a bunch more money into it with our workers. >> reporter: kuiper isn't sure yet if any of his trees were damaged in this year's extreme weather. he's just hoping to get back to business as usual next year. diane eastabrook, nbr, maple park, illinois. >> susie: that's "nightly business report" for tuesday, october 9. good night, everyone. we'll see you online at nbr.com, and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org